On January 16, we advised that The Knot (KNOT) was overvalued at its then current share price of $31. We recommended purchasing the April ‘07 $25 puts (BQCPE.X) - then trading at $1.20 as a way to play that overvaluation. Well, earlier this week, KNOT reported disappointing 4th quarter 2006 results and the stock has since traded down to $25 per share at last night’s close. The April ‘07 $25 puts closed at $2.30 – up 92% from our recommended purchase just four weeks ago. Now would be a good time to sell those puts and lock in a rather nice gain.
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